Guaranty Trust Co. v. United States 304 U.S. 126 (1938)

U.S. Supreme Court

Guaranty Trust Co. v. United States, 304 U.S. 126 (1938)

Guaranty Trust Co. v. United States

No. 566

Argued March 28, 29, 1938

Decided April 25, 1938

304 U.S. 126

Syllabus

1. The rule which exempts the United States and the States from the operation of statutes of limitations rests not upon any inherited notion of royal prerogative, but upon the public policy of protecting the public rights, and thereby the citizen, from injury through negligence of public officers. P. 304 U. S. 132.

2. The benefit of this rule does not extend to a foreign sovereign suing in a state or federal court. P. 304 U. S. 133.

In such cases, the reason for the rule -- the considerations of public policy above mentioned -- are absent.

3. The rights of a sovereign State are vested in the State, rather than in any particular government which may purport to represent it, and suit in its behalf may be maintained in our courts only by that government which has been recognized by the political department of our own government as the authorized government of the foreign state. P. 304 U. S. 136.

4. What government is to be regarded here as representative of a foreign sovereign state is a political, rather than a judicial, question, and is to be determined by the political department of our government. The action of that department in recognizing a foreign government and in receiving its diplomatic representatives is conclusive on all domestic courts, which are bound to accept that determination, although they are free to decide for themselves its legal consequences in litigations pending before them. P. 304 U. S. 137.

5. After the overthrow of the Imperial Russian Government, the United States recognized, March 22, 1917, the Provisional Government of Russia, and thereafter the United States continued to recognize the Provisional Government and to recognize, as its representatives in this country, its Ambassador and the Financial Attache of its Embassy -- until November 16, 1933, when the Soviet Government, which on November 7, 1917, had overthrown the Provisional Government, was for the first time recognized by the United States. At that same time the United States, through an agreement between the President and a representative of the Soviet Government, took from that government an assignment of all

"amounts admitted to be due or that may be found to be due it, as the successor of prior Governments of Russia, or otherwise, from American nationals, including corporations . . ."

The United States, as such assignee, then sued in a federal court in New York to recover from a New York bank the amount of a deposit which had stood to the credit of the Provisional Government. The bank set up the New York statute of limitations, claiming that, in February, 1918, it had offset the deposit against indebtedness due it by the Russian Government, and that, on that date, it had repudiated all liability on the deposit account, and that, prior to June 30, 1922, it had given due notice of such repudiation to both the Financial Attache and the Ambassador of the Provisional Government, thus starting the running of the limitation period.

Held:

(1) That such notice of repudiation, given to the then duly recognized diplomatic representatives, was notice to the Russian State. P. 304 U. S. 139.

(2) That the later recognition of the Soviet Government left unaffected those legal consequences of the previous recognition of the Provisional Government and its representatives, which attached to action taken here prior to the later recognition. P. 304 U. S. 140.

(3) That, if the statutory period has run against the claim of the Russian Government, the claim of the United States, as assignee, is likewise barred since:

(a) Proof that the statutory period had run before the assignment offends against no policy of protecting the domestic sovereign. It deprives the United States of no right, for the proof demonstrates that the United States never acquired a right free of a preexisting infirmity, the running of limitations against its assignor, which public policy does not forbid. P. 304 U. S. 141.

(b) Assuming that the respective rights of the bank and the Soviet Government could have been altered, and the bank's right to plead the statute of limitations curtailed, by force of an executive agreement between the President and the Soviet Government, there is nothing in the agreement and assignment of November 16, 1933, purporting to enlarge the assigned rights in the hands of the United States, or to free it from the consequences of the failure of the Russian government to prosecute its claim within the statutory period. P. 304 U. S. 142.

(4) Even the language of a treaty will be construed, wherever reasonably possible, so as not to override state laws or to impair rights arising under them. P. 304 U. S. 143.

91 F.2d 898 reversed.

Certiorari, 302 U.S. 681, to review the reversal of a judgment dismissing the complaint in an action by the United States to recover from the present petitioner the amount of a bank deposit which the United States claimed as assignee of the Russian Government. The motion was based on the New York statute of limitations.

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